Kyoto Protocol & Carbon Trading Its Impact on Global Climate Change and the Philippines

BY JAN ERL ANGELO B. ROSAL

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 2

A B S T R A C T

Life depends on the warmth of the sun being trapped by layers of gases that

surround the Earth. We now produce so much of these heat-trapping gases that the layer is

getting thicker, heating the world, changing the climate and threatening our way of life. As

the world gets hotter, some of the extreme effects we are experiencing now will become

more frequent, making our planet a more hostile place to live. If we won’t act now, it may

be too late.

With the current global climate scenario we are experiencing now,

environmentalists start to give predictions and world leaders are put upon the pressure of

handling the situation. Increased levels of emissions from harmful gases like methane and

carbon dioxide from countries around the world have been pointed out as the main culprit

for the abrupt change in the climate system, and so in 1997, world leaders met at Kyoto,

Japan to formulate a solution to the threatening problem. That gave birth to the Kyoto

Protocol.

This paper has basically five purposes, (1) to understand the Kyoto Protocol,

relating it to the present situation of the global climate, (2) to clarify the methodologies and

policies being implemented under the protocol, (3) what risks did the United States foresee

that made them back out from the ratification of the agreement, and locally (4) the impact

of Kyoto Protocol in the Philippines in general, and (5) its impact on the Filipinos,

especially the small-scale tree farmers. And with the paper would be our answer to the

question, if this Kyoto Protocol would be the Superman of our generation, or would it

worsen the already devastating problem.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 3

T A B L E O F C O N T E N T S

Global Climate Change (Review) 4

a. Definition 4

b. Historical Impact of Climate Change 4

c. Evidences of Climate Change 5

d. Some Extreme Effects of Global Warming 7

e. Philippine Climate Change 7

f. Runaway Global Warming: The Future of Climate Change 8

Kyoto Protocol 9

a. Definition 9

b. Beginnings of the Protocol 9

c. Objectives 10

d. Concepts 10

e. Emissions/Carbon Trading 11

i. Definition, Advantages and Disadvantages 11

ii. Participating Countries 14

1. The Issue With USA 14

iii. Clean Development Mechanism 16

1. Definition 16

2. The Philippines in Carbon Trading and CDM 16

Conclusions/Recommendations 20

Bibliography 21

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 4

G L O B A L C L I M A T E C H A N G E ( R e v i e w )

D E F I N I T I O N

Climate change is any long-term change in the statistics

of weather over durations ranging from decades to millions of years. It can be manifest in

changes to averages, extremes, or other statistical measures, and may occur in a

specific region or for the Earth as a whole.

In recent usage, especially in the context of environmental policy, climate change

usually refers to changes in modern climate (global warming).

H I S T O R I C A L I M P A C T S

a. Role in Human Evolution Changes in East African climate have been associated with the evolution

of hominids. Researchers have proposed that the regional environment transitioned from

humid jungle to more arid grasslands due to tectonic uplift and changes in broader

patterns of ocean and atmospheric circulation. This environmental change is believed to

have forced hominids to evolve for life in a savannah-type environment. Some data suggest

that this environmental change caused the development of modern hominid features;

however there exist other data that show that morphological changes in the earliest

hominids occurred while the region was still forested. Rapid tectonic uplift likely occurred

in the early Pleistocene, changing the local elevation and broadly reorganizing the regional

patterns of atmospheric circulation. This can be correlated with the rapid hominid

evolution of the Quaternary period. Changes in climate at 2.8, 1.7, and 1.0 million years ago

correlate well with observed transitions between recognized hominid species. It is difficult

to differentiate correlation from causality in these paleo-anthropological and paleo-

climatological reconstructions, so these results must be interpreted with caution and

related to the appropriate time-scales and uncertainties.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

b. Societal Growth and UrbanizationApproximately one millennium after the 7

urban centers rose to prominence around the world. It has been hypothesized that this is

correlated with the development of stable coastal environments and

increase in marine productivity (also related to an increase in temperatures), which would

provide a food source for hierarchical urban societies.

c. Societal Collapse Climate change has been associated with the historical collapse of civi

and dynasties. Notable examples of this include the

E V I D E N C E S O F C L I M A T E C H A N G E

a. Historical and Archaeological EvidenceClimate change in the recent past may be detected by corresponding changes in

settlement and agricultural patterns.

documents can offer insights into past changes in the climate. Climate change effects have

been linked to the collapse of variou

Figure 1. MAYA CIVILIZATION. Climate change is the major factor being considered by historians to cause the of the famous prehistoric civilization.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

Societal Growth and Urbanization Approximately one millennium after the 7 ka slowing of sea-level rise, many coastal

urban centers rose to prominence around the world. It has been hypothesized that this is

correlated with the development of stable coastal environments and ecosystems and an

increase in marine productivity (also related to an increase in temperatures), which would

provide a food source for hierarchical urban societies.

Climate change has been associated with the historical collapse of civi

and dynasties. Notable examples of this include the Anasazi, Classic Maya, the

Hittites and Ancient Egypt. Other, smal

communities such as the Viking

of Greenland have also suffered collapse with

climate change being a suggested contributory

factor.

One of two proposed methods of Classic

Maya collapse is the environmental approach

which uses paleo-climatic evidence to show

that movements in the

convergence zone likely caused severe,

extended droughts during a few time periods at

the end of the archaeological record for the

classic Maya.

E V I D E N C E S O F C L I M A T E C H A N G E

Historical and Archaeological Evidence Climate change in the recent past may be detected by corresponding changes in

and agricultural patterns. Archaeological evidence, oral history

can offer insights into past changes in the climate. Climate change effects have

been linked to the collapse of various civilizations.

Climate change is the major factor being considered by historians to cause the collapse

5

level rise, many coastal

urban centers rose to prominence around the world. It has been hypothesized that this is

ecosystems and an

increase in marine productivity (also related to an increase in temperatures), which would

Climate change has been associated with the historical collapse of civilizations, cities

the Harappa, the

. Other, smaller

Viking settlement

have also suffered collapse with

climate change being a suggested contributory

two proposed methods of Classic

he environmental approach,

limatic evidence to show

intertropical

likely caused severe,

extended droughts during a few time periods at

the end of the archaeological record for the

Climate change in the recent past may be detected by corresponding changes in

oral history and historical

can offer insights into past changes in the climate. Climate change effects have

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

b. Growth and Shrinkage of GlaciersGlaciers are among the most sensitive indicators of climate change, advancing when

climate cools and retreating when climate warms. Glaciers grow and shrink; both

contributing to natural variability an

c. Sea Level Rise Rising sea levels would indicate melting ice caps and thus, evidence of a warmer

climate. Global sea level change for much of the last century has generally been estimated

using tide gauge measurements collated over long periods of time to give a long

average.

d. Ice Core Analysis Analysis of ice in a core drilled from a

used to show a link between temperature and global sea level variations. The air trapped i

bubbles in the ice can also reveal the CO

past, well before modern environmental influences. The

significant indicator of the changes in CO

valuable information about the differences between ancient and modern atmospheric

conditions. (see Figure 2)

e. Dendochronology Dendochronology is the analysis of tree ring growth patterns to determine the age of a

tree. From a climate change viewpoint, however, Dendochronology c

climatic conditions for a given number of years. Wide and thick rings indicate a fertile, well

watered growing period, whilst thin, narrow rings indicate a time of lower rainfall and less

than-ideal growing conditions.

Figure 2. TRACE BACK THROUGH ICE. GISP2 ice core at 1837 meters depth with clearly visible annual

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

Growth and Shrinkage of Glaciers are among the most sensitive indicators of climate change, advancing when

climate cools and retreating when climate warms. Glaciers grow and shrink; both

contributing to natural variability and amplifying externally forced changes.

Rising sea levels would indicate melting ice caps and thus, evidence of a warmer

Global sea level change for much of the last century has generally been estimated

measurements collated over long periods of time to give a long

Analysis of ice in a core drilled from a ice sheet such as the Antarctic ice sheet

used to show a link between temperature and global sea level variations. The air trapped i

bubbles in the ice can also reveal the CO2 variations of the atmosphere from the distant

past, well before modern environmental influences. The study of these ice cores has been a

significant indicator of the changes in CO2 over many millennia, and continues

valuable information about the differences between ancient and modern atmospheric

is the analysis of tree ring growth patterns to determine the age of a

tree. From a climate change viewpoint, however, Dendochronology can also indicate the

climatic conditions for a given number of years. Wide and thick rings indicate a fertile, well

watered growing period, whilst thin, narrow rings indicate a time of lower rainfall and less

GISP2 ice core at 1837 meters depth with clearly visible annual layers.

6

are among the most sensitive indicators of climate change, advancing when

climate cools and retreating when climate warms. Glaciers grow and shrink; both

d amplifying externally forced changes.

Rising sea levels would indicate melting ice caps and thus, evidence of a warmer

Global sea level change for much of the last century has generally been estimated

measurements collated over long periods of time to give a long-term

Antarctic ice sheet, can be

used to show a link between temperature and global sea level variations. The air trapped in

variations of the atmosphere from the distant

study of these ice cores has been a

nues to provide

valuable information about the differences between ancient and modern atmospheric

is the analysis of tree ring growth patterns to determine the age of a

an also indicate the

climatic conditions for a given number of years. Wide and thick rings indicate a fertile, well-

watered growing period, whilst thin, narrow rings indicate a time of lower rainfall and less-

layers.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

S O M E E X T R E M E E F F

• Sea levels continue to rise as ice caps continue to melt.

• Weather patterns are unpredictable.

• Storms and hurricanes are stronger in nature.

• Supertyphoons and tropical cyclones occur more often each year as compared to

past decades.

• Temperature extremes have inflated, as in the several abnormal cases of heat and

cold waves.

• Mean temperatures have risen, and now pose a threat to life on Earth.

• Wet and dry seasons are fluctuating, as in the occurrence of heavy rainfall even

during summer months.

P H I L I P P I N E C L I M A T E C H A N G E

Climate change impacts have been manifested in the Philippines by extreme

weather occurrence such as floods, droughts, forest fires, and an increase in tropical

Figure 3. MOTHER NATURE STRIKES BACK. struggles for shelter from a chest-high floodthe ravage of Bagyong Ondoy in the suburbs of Metro Manila.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

S O M E E X T R E M E E F F E C T S ( G l o b a l W a r m i n g )

Sea levels continue to rise as ice caps continue to melt.

Weather patterns are unpredictable.

Storms and hurricanes are stronger in nature.

Supertyphoons and tropical cyclones occur more often each year as compared to

Temperature extremes have inflated, as in the several abnormal cases of heat and

Mean temperatures have risen, and now pose a threat to life on Earth.

Wet and dry seasons are fluctuating, as in the occurrence of heavy rainfall even

r months.

P H I L I P P I N E C L I M A T E C H A N G E

Climate change impacts have been manifested in the Philippines by extreme

weather occurrence such as floods, droughts, forest fires, and an increase in tropical

cyclones. These extreme weather events associated

with climate change, and the disasters these have

wrought, have caused losses amounting to billions

of pesos.

Environmental Impacts • The average temperature of Metro Manila

has increased by approx. 0.5 °C in just 30 years.

• Several landslides and floods have been

reported for this present decade, with alerting

numbers of casualties.

MOTHER NATURE STRIKES BACK. A man high flood during

in the suburbs of

7

)

Supertyphoons and tropical cyclones occur more often each year as compared to

Temperature extremes have inflated, as in the several abnormal cases of heat and

Mean temperatures have risen, and now pose a threat to life on Earth.

Wet and dry seasons are fluctuating, as in the occurrence of heavy rainfall even

Climate change impacts have been manifested in the Philippines by extreme

weather occurrence such as floods, droughts, forest fires, and an increase in tropical

cyclones. These extreme weather events associated

limate change, and the disasters these have

wrought, have caused losses amounting to billions

The average temperature of Metro Manila

has increased by approx. 0.5 °C in just 30 years.

Several landslides and floods have been

reported for this present decade, with alerting

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 8

Socio-Economic Impacts • From 1975 to 2002, tropical cyclones have resulted to losses of 4.578 billion pesos

due to damage to property, including damage to agriculture worth 3.047 billion

pesos.

• Drought in Southern Mindanao in 1998, the 2nd hottest year on record, incurred

crop losses amounting to 828 million pesos.

• Damages due to four successive tropical cyclones towards the end of 2004 cost the

nation an estimated 7,615.98 million pesos.

R U N A W A Y G L O B A L W A R M I N G T H E F U T U R E O F C L I M A T E C H A N G E

Runaway climate change is a

situation in which the climate system

passes a tipping point, after which the

climate continues changing without

further external forcing. The runaway

climate change continues until it is

overpowered by negative feed-

back effects which cause the climate

system to re-stabilize at a new state.

The Earth’s temperature has

already risen by 1°C. If it continues

by up to 2°C, the Earth will start to heat up all by itself, and thus resulting to runaway

global warming. Some scientists speculate that if the current situation of the environment

continues, in a period of 4 to 10 years, we will gain another degree centigrade and reach

this tipping point. So the people need to take action to change the state of nature before

that 4-10 year period. It is said that it would take barely half a century or so before the

climate system would go back to its original state.

Figure 4. GOING UP. Scientists believe that if we do not act now, the temperature will keep rising until it becomes "unstoppable".

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 9

T H E K Y O T O P R O T O C O L

D E F I N I T I O N

The Kyoto Protocol is a protocol to the United Nations Framework Convention on

Climate Change (UNFCCC or FCCC), an international environmental treaty produced at the

United Nations Conference that intends to achieve “stabilization of greenhouse gas

concentrations in the atmosphere at a level that would prevent dangerous anthropogenic

interference with the climate system.”

The Kyoto Protocol establishes legally binding commitment for the reduction of four

greenhouse gases (carbon dioxide, methane, nitrous oxide, sulfur hexafluoride), and two

groups of gases (hydrofluorocarbons and perfluorocarbons) produced by "Annex I"

(industrialized) nations, as well as general commitments for all member countries. Under

the Kyoto Protocol, industrialized countries agreed to reduce their collective greenhouse

gas (GHG) emissions by 5.2% from the level in 1990.

B E G I N N I N G S O F T H E P R O T O C O L The treaty was negotiated in Kyoto,

Japan in December 1997, opened for

signature on 16 March 1998, and closed on 15

March 1999. The agreement came into force

on 16 February 2005 following ratification by

Russia on 18 November 2004.

As of 14 January 2009, a total of 183

countries and 1 regional economic

integration organization (the EC or European

Commission) have ratified the agreement

(representing over 63.7% of emissions).

Figure 5. THE START OF SOMETHING NEW. Kyoto Protocol was born in Kyoto, Japan in December of 1997.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 10

O B J E C T I V E S

The objective is the "stabilization and reconstruction of greenhouse gas

concentrations in the atmosphere at a level that would prevent dangerous anthropogenic

interference with the climate system."

The objective of the Kyoto climate change conference was to establish a legally

binding international agreement, whereby all the participating nations commit themselves

to tackling the issue of global warming and greenhouse gas emissions. The target agreed

upon was an average reduction of 5.2% from 1990 levels by the year 2012. The

Intergovernmental Panel on Climate Change (IPCC) has predicted an average global rise in

temperature of 1.4°C (2.5°F) to 5.8°C (10.4°F) between 1990 and 2100.

Kyoto Protocol is a first step as requirements to meet the UNFCCC will be modified

until the objective is met, as required by UNFCCC Article 4.2(d).

C O N C E P T S

The five principal concepts of the Kyoto Protocol are:

• commitments to reduce greenhouse gases that are legally binding for Annex I

countries, as well as general commitments for all member countries;

• implementation to meet the Protocol objectives, to prepare policies and measures

which reduce greenhouse gases; increasing absorption of these gases and use all

mechanisms available, such as joint implementation, clean development mechanism

and emissions trading; being rewarded with credits which allow more greenhouse

gas emissions at home;

• minimizing impacts on developing countries by establishing an adaptation fund for

climate change;

• accounting, reporting and review to ensure the integrity of the Protocol;

• compliance by establishing a compliance committee to enforce commitment to the

Protocol.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 11

E M I S S I O N S / C A R B O N T R A D I N G

Emissions trading (or carbon trading) is an administrative approach used to

control pollution by providing economic incentives for achieving reductions in the

emissions of pollutants. It is sometimes called cap and trade. It is under the Kyoto Protocol

of the United Nations.

H o w t h e “ T r a d i n g ” H a p p e n s 1. A central authority (usually a government or international body) sets a limit

or cap on the amount of a pollutant that can be emitted.

2. Companies or other groups are issued emission permits and are required to hold an

equivalent number of allowances (or credits) which represent the right to emit a

specific amount. The total amount of allowances and credits cannot exceed the cap,

limiting total emissions to that level.

3. Companies that need to increase their emission allowance must buy credits from

those who pollute less. The transfer of allowances is referred to as a trade.

4. In effect, the buyer is paying a charge for polluting, while the seller is being

rewarded for having reduced emissions by more than was needed.

A d v a n t a g e s The overall goal of an emissions trading plan is to reduce emissions. The cap is

usually lowered over time - aiming towards a national emissions reduction target. In other

systems a portion of all traded credits must be retired, causing a net reduction in emissions

each time a trade occurs. In many cap and trade systems, organizations which do not

pollute may also participate, thus environmental groups can purchase and retire

allowances or credits and hence drive up the price of the remainder according to the law of

demand. Corporations can also prematurely retire allowances by donating them to a

nonprofit entity and then be eligible for a tax deduction.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 12

Because emissions trading uses markets to determine how to deal with the

problem of pollution, it is often touted as an example of effective free market

environmentalism. While the cap is usually set by a political process, individual

companies are free to choose how or if they will reduce their emissions. In theory, firms

will choose the least-costly way to comply with the pollution regulation, creating incentives

that reduce the cost of achieving a pollution reduction goal.

According to environmentalists, market based mechanisms are a legal compliance

tool, designed to achieve an outcome in the most efficient manner. With trading, you must

reduce emissions and you must pay the cost to do so.

The biggest advantage for them is that emissions trading makes reducing emissions

cheaper, and by doing so it makes the willingness to act stronger.

D i s a d v a n t a g e s Fundamentally, pollution trading is wrong. It treats clean air and public health

as a private commodity to be traded, speculated against, and profited from. What once was

a wrong—i.e., polluting—is now a "right". Instead of people having the right to breathe

free, businesses have the right to pollute and make money while doing so.

Carbon Trading has not achieved CO2 emissions reductions. Most countries

participating in the Kyoto Protocol are failing to meet their target greenhouse gas

emissions reductions. Canada has consistently failed to meet its Kyoto targets and

currently exceeds greenhouse gas emission targets by about 25%. The European

Commission reported that emissions from the major industrial users throughout the

European Union actually rose by 1% to 1.5% in 2006. (see Figure 6)

Carbon trading is difficult to monitor. It invites accounting fraud in a market

where both the seller and the buyer have a shared interest in low quality products. A 2007

Financial Times investigation uncovered widespread failings in markets for greenhouse

gases, suggesting some organizations are paying for emissions reductions that do not take

place.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 13

Polluting fossil-fuel plant would continue to operate. A cap and trade system

would allow heavy polluters to buy credits from less polluting facilities. There would be no

incentive to close or clean up the heaviest polluting power or industrial plants in

communities where health already is compromised by their presence. Such plants are often

located in low-income communities and communities of color, who experience

disproportionate effects from power plant pollution that causes heart disease, asthma and

pre-mature death.

Time is of the essence. The climate crisis is urgent. We do not have the luxury of

waiting while the myriad details of a cap-and-trade system are resolved through lengthy

negotiations.

Figure 6. PROMISES. The "First 36" countries who ratified the Kyoto Protocol and how they are doing.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 14

P a r t i c i p a t i n g C o u n t r i e s

As of February 2009, 183 states and 1 union (European Union) have signed and

ratified the Kyoto Protocol to the United Nations Framework Convention on Climate

Change, making it 184.

With Russia's ratification the "55 percent of 1990 carbon dioxide emissions of the

Parties included in Annex I" clause was satisfied and the treaty brought into force, effective

16 February 2005.

T h e I s s u e W i t h U S A

The United States of America, although a signatory to the Kyoto Protocol, has

neither ratified nor withdrawn from the Protocol. The signature alone is merely symbolic,

as the Kyoto Protocol is non-binding on the United States unless ratified. (see Figure 7) The

United States was, as of at least 2005, the largest per capita emitter of carbon dioxide from

the burning of fossil fuels.

Figure 7. HAND-IN-HAND. Participating countries are in green, neutral states in gray, and countries that did not accept in red.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 15

On 25 July 1997, before the Kyoto Protocol was finalized (although it had been fully

negotiated, and a draft was finished), the U.S. Senate unanimously passed by a 95–0 vote

the Byrd-Hagel Resolution (S. Res. 98), which stated the sense of the Senate was that the

United States should not be a signatory to any protocol that did not include binding targets

and timetables for developing nations as well as industrialized nations or "would result in

serious harm to the economy of the United States".

On 12 November 1998, Vice President Al Gore symbolically signed the protocol.

Both Gore and Senator Joseph Lieberman indicated that the protocol would not be acted

upon in the Senate until there was participation by the developing nations. The Clinton

Administration never submitted the protocol to the Senate for ratification.

President George W. Bush, in his administration, did not submit the treaty for Senate

ratification based on the exemption granted to China (now the world's largest gross

emitter of carbon dioxide, although emission is low per capita). Bush opposed the treaty

because of the strain he believed the treaty would put on the economy; he emphasized the

uncertainties which he believed were present in the scientific evidence. Furthermore, the

U.S. was concerned with broader exemptions of the treaty. For example, the U.S. did not

support the split between Annex I countries and others. Bush said of the treaty:

“This is a challenge that requires a 100% effort; ours, and the rest of the world's. The world's second-largest emitter of greenhouse gases is the People's Republic of China. Yet, China was entirely exempted from the requirements of the Kyoto Protocol. India and Germany are among the top emitters. Yet, India was also exempt from Kyoto ... America's unwillingness to embrace a flawed treaty should not be read by our friends and allies as any abdication of responsibility. To the contrary, my administration is committed to a leadership role on the issue of climate change ... Our approach must be consistent with the long-term goal of stabilizing greenhouse gas concentrations in the atmosphere.”

President Barack Obama has, as yet, taken no action with the senate that would change

the position of the United States towards this protocol. When Obama was in Turkey in April

2009, he said that "it doesn't make sense for the United States to sign the Kyoto Protocol

because it is about to end". At this time, two years and eleven months remained from the

four-year commitment period.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

C L E A N D E V E L O P M E N T M E C H A N I S M

The Clean Development Mechanism (CDM), still under carbon trading and t

Kyoto, is a mechanism that gives incentives to any party for helping in the environment’s

recovery.

For example, people who grow forests or reforest damaged areas are also given

carbon credits. These carbon credits can also be sold to those countries t

carbon emissions. The mechanics are still the same; only for that carbon trading deals with

money while CDM is investing on projects that could help nature recover.

Some CDM Projects that could avail carbon credits

• Afforestation – conversion of raw land into forests

• Reforestation – restoring of denuded/destructed forests

• Biodiesel – usage of fuel extracted from plants (ex. Ethanol)

P H I L I P P I N E S I N C A R B O N T R A D I N G A N D C D M

Figure 8. REGRETS, REGRETS. Residents near Laguna Lake take hand-in-hand the challenge of reforestingdenuded forest surrounding the perimeter of the lake.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G

C L E A N D E V E L O P M E N T M E C H A N I S M

The Clean Development Mechanism (CDM), still under carbon trading and t

Kyoto, is a mechanism that gives incentives to any party for helping in the environment’s

For example, people who grow forests or reforest damaged areas are also given

carbon credits. These carbon credits can also be sold to those countries that have excess

carbon emissions. The mechanics are still the same; only for that carbon trading deals with

money while CDM is investing on projects that could help nature recover.

Some CDM Projects that could avail carbon credits include:

conversion of raw land into forests

restoring of denuded/destructed forests

usage of fuel extracted from plants (ex. Ethanol)

P H I L I P P I N E S I N C A R B O N T R A D I N G A N D C D M

Currently, the Philippines is implementing

three World Bank supported greenhouse gas

(GHG) emission reduction projects, the

rehabilitation project of Laguna Lake focusing on

reforestation and agroforestry, the Laguna de

Bay watershed project focusing on

emission reduction from waste management

projects, and the North Wind Bangui Bay project

in the northern tip of Luzon focusing on

free energy generation.

Residents near Laguna challenge of reforesting the

denuded forest surrounding the perimeter of the lake.

16

The Clean Development Mechanism (CDM), still under carbon trading and the

Kyoto, is a mechanism that gives incentives to any party for helping in the environment’s

For example, people who grow forests or reforest damaged areas are also given

hat have excess

carbon emissions. The mechanics are still the same; only for that carbon trading deals with

P H I L I P P I N E S I N C A R B O N T R A D I N G A N D C D M

Currently, the Philippines is implementing

three World Bank supported greenhouse gas

(GHG) emission reduction projects, the watershed

rehabilitation project of Laguna Lake focusing on

, the Laguna de

Bay watershed project focusing on methane

emission reduction from waste management

, and the North Wind Bangui Bay project

in the northern tip of Luzon focusing on carbon–

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 17

Among the CDM projects and carbon trading, Afforestation/Reforestation is the

most profitable for the Philippines. Even small-scale tree farmers can earn from carbon

trading through CDM. These tree farmers can earn their living from planting trees for

carbon credits. Thus, participating in CDM might help alleviate poverty, and at the same

time, help the country’s resources in its pursuit for recovery.

C h a l l e n g e s M e t i n C a r b o n T r a d i n g a n d C D M

1 . C o m p l i c a t e d t r a n s a c t i o n s a n d t h e n e e d f o r i n t e r m e d i a r y b o d y Like in the Philippines, many people in Southeast Asian countries expect substantial

financial returns from carbon after a multi-year investment in planting trees. But

generating funds from forestry carbon projects through the Afforestation/Reforestation

Clean Development Mechanism (AR-CDM) under the Kyoto Protocol is an enormous task.

In most cases, smallholders alone cannot solely accomplish the required documents. In

Vietnam, SNV (Netherlands Development Organization) as an intermediary organization is

helping farmers obtain benefits from forestry carbon through the AR-CDM. The presence of

an intermediary agency officially designated by the government to support smallholders is

crucial. In the Philippines, the Department of Environment and Natural Resources (DENR)

could serve such a role since it has regional offices throughout the country that could assist

smallholders to benefit from emerging carbon trading.

2 . S m a l l l a n d h o l d i n g s , l a n d t e n u r e a n d l a n d o w n e r s h i p Aggregating environmental services, particularly carbon, into saleable form from

small-scale farms is beset by the issue of land ownership. While it is relatively easy to

process documents from a single, big land owner, it requires more effort to integrate varied

aspirations and demands from the fragmented small-scale tree farm owners. This would

likely discourage carbon buyers from negotiating with the small land holders unless a

unified and smooth agreement can be achieved. Besides, many small-scale farmers may not

actually own the land they are currently cultivating. The original owners would still dictate

the land use, which might prevent the tenant’s participation in any carbon trading scheme.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 18

3 . P r i c e s t a b i l i t y a n d p r o f i t a b i l i t y o f c a r b o n

Carbon as a commodity will be in the form of carbon emission reduction certificates

that will be traded between the buying and selling parties. The price will be determined

through the interaction of the parties involved. For the sellers, the main consideration will

be how much it would cost them to establish and maintain the carbon offset project, as well

as the foregone values or opportunity costs. The buyers, on the other hand, would be

interested to buy the carbon credits only if these are cheaper than the cost of reducing

emissions at source.

4 . N a t u r a l c a l a m i t i e s The implementation of a clear and transparent carbon trading scheme in the

Philippines is made more complicated by the frequent calamities (particularly typhoons)

that have cost the country so much. Millions of dollars in damages to roads, bridges, and

public buildings are incurred annually. Due to the prevalence of destructive typhoons, the

Philippines National Disaster Coordinating Council must come up with a scheme to insure

smallholder tree farms.

5 . A b s e n c e o f c l e a r t r a d i n g s c h e m e s A clear and transparent carbon trading scheme specifying the quantification

method, price per ton of carbon, payment scheme and harvesting modalities is necessary to

attract the smallholders. If established, there would be greater flexibility on the part of

smallholders to work towards AR-CDM projects or participate in carbon trading schemes.

Profitable carbon trading could also result in increased supply of timber for the wood

industry as there would be more people engaged in tree farming. Questions regarding

carbon price, payment scheme, future utilization of mature trees, the need for designated

regional markets where the harvested timber (that passed through carbon trading) could

be sold still need to be resolved.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 19

6 . L o n g - t e r m s e c u r i t y a n d s t a k e h o l d e r p a r t i c i p a t i o n Many smallholders are rightly skeptical of poverty alleviation schemes promoted by

the government. In the past, the Philippine government implemented several forestry

initiatives geared toward eradicating poverty in the rural communities but their success

has been marginal. Only when smallholders find that carbon trading truly provides long-

term benefits to them will their participation in such schemes be assured.

7 . I n s u f f i c i e n t i n f o r m a t i o n d i s s e m i n a t i o n The Philippines is taking a major and innovative step into a new renewable energy

era with the signing of the first GHG reduction purchase agreement (RPA) for a wind farm

project in the ASEAN Region, under the CDM of the Kyoto Protocol . The watershed

rehabilitation project of Laguna de Bay is also a major and ground-breaking development

in carbon trading in the Philippines with potential benefits for smallholders. However,

information on these developments has not reached the majority of smallholders. There is

still a need to disseminate such information so that necessary steps can be taken by the

various stakeholders (including smallholders in the Visayas and Mindanao Islands) to

obtain benefits from carbon trading under these and other projects.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 20

C O N C L U S I O N S / R E C O M M E N D A T I O N S

Carbon trading is a potential means by which smallholders could enhance their

revenue from small-scale tree farming and agroforestry. This could be a resort to all those

farmers who have deprived of a real “agrarian reform” from the government.

This new method of solving the problem of the world’s climate system is a very

“innovative” yet laborious one. Who’d ever think of trading emissions? And when did one

get paid for planting trees and reforesting denuded areas? For the country, this would be

very beneficial since we are at the peak of the era of depletion wherein we are on the verge

of stepping beyond the maximum sustainable yield of our resources. Not to mention that

we have been described as one of the N-11 (Next Eleven) economies, our nation is indeed

staging a metamorphosis from a developing nation to an industrialized one in the future.

This means there would be more factories, more plants, more technology, and more

emissions in the future. And when is the better time to prepare than now? With our

participation in this Kyoto Protocol, we are hand-in-hand with those other nations who are

aiming for what they call a “green collar economy”, and with a green collar economy comes

the balance between income and environment.

Back to carbon trading for the Filipinos, it may play an important role in the future

since it has the potential of fulfilling the woes and lamentations of those humble farmers

who need their equal share of recognition. “Economic incentives for being environment-

friendly” – isn’t that nice to hear? Filipinos can earn a living from saving the planet. If only

the challenges mentioned above can be resolved, thereby providing a clear and transparent

trading mechanism for carbon, smallholders engaged in tree farming are expected to

benefit.

K Y O T O P R O T O C O L A N D C A R B O N T R A D I N G 21

B I B L I O G R A P H Y / R E F E R E N C E S

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whitehouse.archives.gov/news/releases/2001/06/20010611-2.html

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